FOREX-Yen rises, yuan falls after China's Hubei reports sharp rise in virus cases

Published 13/02/2020, 01:40
© Reuters.  FOREX-Yen rises, yuan falls after China's Hubei reports sharp rise in virus cases

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

* Rise in new cases comes after Hubei changes methodology

* Yen gains, Aussie dips as virus anxiety return to haunt

markets

* Asian Stocks and Australian dollar also on pullback

By Stanley White

TOKYO, Feb 13 (Reuters) - The yen rose from a three-week low

against the dollar on Thursday after China's Hubei province, the

epicentre of a coronavirus outbreak, reported a sharp jump in

the number of new cases in a jolt to markets and sparking a

flight for safe-haven assets.

The Chinese yuan slipped against the dollar in offshore

trade, while stocks in Asia also faltered as the latest update

on the spread of the virus provided a grim reminder to investors

that the epidemic remains a potent threat to the global economic

outlook. Hubei on Thursday reported 14,840 new cases as of Feb. 12,

up from 1,638 new cases on Tuesday, with the number of deaths in

the province rising a sharp 242 to 1,310.

Hubei's health commission said it started including cases

diagnosed with a new method. Uncertainty about the virus, which

emerged in Hubei's capital Wuhan late last year and has spread

to 24 other countries, has shaken up markets over the past

weeks.

"When you see numbers like this, you can't help but move to

risk-off trades, which means buy the yen and sell stocks," said

Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank in

Tokyo.

"If the authorities can reasonably explain this, things

might calm down, but I expect risk aversion to continue."

The yen JPY=EBS rose 0.18% on Thursday to 109.90 yen,

pulling back from its weakest since Jan. 21.

In the offshore market, the yuan CNH=D3 fell 0.16% to

6.9840 yuan.

The Australian dollar AUD=D3 , widely used as a proxy for

risk on Chinese assets, fell 0.21% to $0.6724, while the New

Zealand dollar NZD=D3 dipped 0.2% to $0.6452.

Both Australian and New Zealand have extensive trade ties

with China, with trade in commodities, tourism and education

especially vulnerable to disruption from the virus.

The World Health Organization has likened the epidemic's

threat to terrorism, underscoring the anxiety in financial

markets about its impact across businesses and trade worldwide.

Chinese policymakers have implemented a raft of measures to

support the economy as fears grow the coronavirus outbreak could

have a damaging impact on growth in the Asian giant and

globally.

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